The Equal Employment Opportunity Commission is soliciting public comments on two proposed policy changes that could have a significant impact on employers. The agency plans to require companies with 100 or more employees to include pay data as part of their Employer Information Report (EEO-1) form submissions, and issue enforcement guidance on unlawful retaliation.
EEO-1 Pay & Hours Data
On January 29, 2016—seven years to the day the Lilly Ledbetter Fair Pay Act was signed into law—the EEOC announced its intent to amend the current, demographic-related EEO-1 data collection requirements to include pay information for large employers. The action is among those President Obama highlighted during a White House speech to mark the anniversary of the first piece of legislation he signed into law. According to a White House fact sheet, “The President is highlighting several additional actions that his Administration is taking to further advance equal pay for all workers and to further empower working families." The White House explains that the EEOC's proposal would cover over 63 million employees and “will help focus public enforcement of our equal pay laws and provide better insight into discriminatory pay practices across industries and occupations.”
Specifically, starting in 2017, employers with 100 or more employees (both private companies and federal contractors) would be required to submit information on their employees' pay and hours worked as part of the EEO-1 data collection process. Currently, covered employers with 100 or more employees provide information on their employees’ ethnicity, race, and sex, by job category. The proposed policy changes would impact smaller employers as well, as this more limited reporting obligation would now extend to employers with 50-99 employees.
The EEOC's proposed changes will be published in the February 1, 2016 edition of the Federal Register in the form of a Notice seeking from the Office of Management and Budget a three-year approval of the revised EEO-1 data collection. The Notice outlines which employers would be required to report their pay data, when this collection will commence, when the annual EEO-1 reports will be due, which pay data will be collected, and how employers will submit such information.
The push for additional pay information collection began more than six years ago when the President's National Equal Pay Task Force recommended that the EEOC coordinate with the National Academy of Sciences (NAS) to conduct a study to determine how best to collect pay data to support its wage discrimination enforcement efforts. Among other recommendations, the NAS report suggested the EEOC work with the Office of Federal Contract Compliance Programs (OFCCP) to develop a plan for obtaining and using the compensation data.
On April 8, 2014, the President issued a Memorandum, “Advancing Pay Equality Through Compensation Data Collection,” which directed the Secretary of Labor to develop a compensation data collection proposal. Four months later, the OFCCP responded by issuing a proposed rule that would require certain federal contractors and subcontractors to supplement their EEO-1 report with summary information on compensation paid to employees, as contained in the Form W-2 Wage and Tax Statement (W-2) forms, by sex, race, ethnicity, and specified job categories, and include other information such as hours worked and their number of employees.
The EEOC's proposed EEO-1 changes appear to be part of this coordinated agency effort. The proposed changes to the EEO-1 report to collect pay data expands on and replaces an earlier plan by the Department of Labor to collect similar information from federal contractors. The EEOC Notice states:
Public comments submitted to OFCCP about the proposed Equal Pay Report and rule argued for, among other things, the need to improve interagency coordination and decrease employer burden for reporting compensation data by using the EEO-1, rather than a new OFCCP data collection, as well as the need to protect privacy and data confidentiality. The instant proposal responds to these concerns.
With respect to how the EEOC intends to use this wage information, the Notice explains:
In the course of developing this EEO-1 proposal, the EEOC and OFCCP together consulted with the Department of Justice, focusing on how EEO-1 pay data would be used to assess complaints of discrimination, focus investigations, and identify employers with existing pay disparities that might warrant further examination. The EEOC and OFCCP plan to develop statistical tools that would be available to staff on their computers, to utilize the EEO-1 pay data for these purposes. They also anticipate developing software tools and guidance for stakeholders to support analysis of aggregated EEO-1 data. Finally, the EEOC and OFCCP anticipate that the process of reporting pay data may encourage employers to self-monitor and comply voluntarily if they uncover pay inequities.
To this end, the EEOC seeks public input on, among other issues, how employers can report hours worked for salaried employees, and the estimated hours it would take for them to comply with this new reporting requirement. Comments on this proposed rule are due on or about April 1, 2016. The agency also intends to hold a public hearing on this matter at a time and date to be determined.
The proposed changes to the EEO-1 reporting requirements come a little over a week after the EEOC announced its intention to issue new Enforcement Guidance on retaliation and related issues. This 76-page guidance document, which includes definitions to related EEO concepts and example scenarios, appears to make significant policy changes as well.
Notably, the guidance would expand the definition of "protected activity," and broaden the basis for proving the link between the protected activity and the contested employer action. For example, the guidance states: "The charging party may discredit the defendant’s explanation [for the adverse action] and demonstrate a causal connection between the prior protected activity and the challenged adverse action by what one appellate court has described as a ‘convincing mosaic’ of circumstantial evidence that would support the inference of retaliatory animus." If implemented, this vague, causal standard could drastically increase the number of (and, potentially, the value of) retaliation claims.
Public input on this new guidance is due by February 24.1